The Oaks in deep financial straits with $17 million in debt

Jul. 1--The Oaks in Orangeburg is in the process of being sold in an attempt save the financially struggling entity and keep it operational.

Oaks residents hoping sale will be beneficial

Local

Oaks residents hoping sale will be beneficial

-- By GENE ZALESKI

T&D Staff Writer

Details on just how much the continuing-care retirement community is struggling financially were revealed in June at the South Carolina United Methodist Annual Conference via a resolution authorizing the sale of the property.

Oaks board OKs sale; Orangeburg retirement community being sold to company led by Longwood owner

Local

Oaks board OKs sale; Orangeburg retirement community being sold to company led by Longwood owner

-- By GENE ZALESKI

T&D Staff Writer

"The financial condition of The Methodist Oaks has caused it to incur monthly operating deficits averaging $125,000 for the past six months and its situation is so dire that it may be unable to have sufficient funding to continue operations until the closing, if the closing does not occur until that time," the resolution states. "The Board of The Methodist Oaks does not believe that the current operations of The Methodist Oaks can continue to contribute to and carry out the mission of The Methodist Oaks without financial aid and the anticipated sale."

The sale was approved by the board of The Oaks on April 22 and presented during the S.C. United Methodist Annual Conference.

The Annual Conference, The Methodist Oaks Board of Trustees, South Carolina Conference UMC Bishop Jonathan Holston and his cabinet authorized the sale of The Oaks on May 31.

Formerly named The Methodist Oaks, the facility underwent a name change a few years ago and operates as an independent, non-profit corporation. It is not owned by the United Methodist Church but identifies itself as a "United Methodist community."

The resolution states The Oaks of Orangeburg LLC has entered into a "standstill agreement" with The Oaks, the non-profit corporation, "in order to conduct due diligence for a period of 45 to 60 days" before a purchase offer is made.

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The sale is expected to close in September 2019, according to the resolution.

In the interim, The Oaks as a non-profit corporation will seek funding from the United Methodist Church or other sources to allow it to continue operations until the sale is closed.

Despite the authorized sale and questions about the viability of The Oaks, officials with the church as well as with the new entity have been mum on the sale's impact.

"We still don't have any new information to report," said Clay Fowler, in an email when asked about plans to turn the residential home around financially. "When we do I will be sure to let you know. Thanks for keeping this in mind."

Fowler, who leads the for-profit, limited-liability corporation purchasing The Oaks, is owner and operator of Orangeburg's Longwood Plantation Assisted Living and Magnolia Place Memory Care.

The Oaks CEO Andy Cox echoed Fowler.

"We don't have any new details to report at this time," Cox said. "As we have previously communicated, as more details become available, we will reach out."

Board members of The Oaks have referred all questions to Fowler and Cox.

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S.C. Conference of the UMC Communications Director Dan O'Mara also referred questions to The Oaks. Attempts to reach South Carolina UMC Bishop Holston by email and phone were unsuccessful.

The South Carolina United Methodist Advocate, a newspaper owned and distributed by the church, reported the financial plight of The Oaks in its July 2019 edition.

The newspaper reported that The Oaks' debt is $17 million.

According to tax documents, from 2011 to 2017, The Oaks sustained about a $4.7 million loss, with losses in 2017 of $967,970; 2016 of $1.7 million; 2015 of $943,406; and 2014 of $1.8 million.

The Advocate article notes that many church delegates were unaware of the difficult financial straits of the residential facility.

In the article, Cox attributes the debt to typical mortgages and leases as well stock market losses. Recent changes in Medicaid and Medicare funding have also impacted the facility.

The Oaks has an annual operating budget of $22 million, the article states.

Some, according to the newspaper article, are concerned about the facility becoming a for-profit and how that may impact the ability of those presently living there to afford the services.

The Oaks offers independent living with other services including assisted living, rehabilitation and long-term care.

"The Methodist Oaks has struggled financially for many years and has not been able to operate without a deficit recently, despite considerable effort to reduce overhead and expenses," the resolution states.

The resolution states that the board of The Oaks has reached out to a number of similar non-profit entities, "both those affiliated with the Methodist Church and those without this religious affiliation, but has been unable to attract any offers from any other such entities."

According to the resolution, The Oaks was contacted by Fowler about its situation.

During the sale's announcement, Cox met with residents of The Oaks and assured them that it would remain a continuing-care retirement community and will retain the PACE (Program for All-Inclusive Care for the Elderly) program with all of its current components.

The transition to The Oaks of Orangeburg LLC will be done over the coming year.

Cox said residents will be engaged throughout the transition process to ensure their input is received and taken into consideration in the decision-making processes.

Former Oaks CEO the Rev. James McGee, who retired in 2015, declined comment except to note he is aware of the sale.

"While I hate to see The Oaks sold, I certainly understand the necessity in order to protect the residents and staff," he said. "I have confidence in the buyers."

"The Oaks has been struggling for years and years," he said. "The board and Andy Cox and everyone has done everything they could. The revenue was just not there."

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Contact the writer: [email protected] or 803-533-5551. Check out Zaleski on Twitter at @ZaleskiTD.

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